The bond-related formulas and functions in the previous chapters assume that every period is the same length. For example, that coupon payments occur every three, six, or twelve months. Some bonds have irregular first or last periods, where the payment dates don’t fit any of those patterns. When you want to calculate the price of a bond with an odd last period, use the ODDLPRICE function.
- [Instructor] The bond related formulas and functions…in the previous chapters assume…that every period is of the same length.…For example, that coupon payments occur every…three, six, or 12 months.…Some bonds have irregular first or last periods though,…where the payment dates don't fit any of those patterns.…So Excel includes a set of functions…you can use to evaluate those securities.…In this movie, I will show you…how to calculate the yield of a security…with an odd last period.…As my sample file,…I will use OddLastPrice_06_03,…which is a workbook you can find in the chapter six folder…of the exercise files collection.…
For this investment we know the yield…and other information.…And what we want to do is calculate the fair market value…or price for this investment.…We need to know a lot of information.…The first is the settlement date.…That is the date that you, the investor,…take possession of the security.…Next is maturity date.…That's the date the investment ends…and you're paid what you're owed.…Last coupon date is the date of the last coupon payment.…
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- Recall what the type argument is used to determine when using the PMT function.
- Identify what the M stands for in the ACCRINTM function.
- Name the accounting rules used by the AMORDEGRC function to assign a depreciation coefficient to an asset.
- Recall what internal rate of return generated by the IRR function should be measured against to determine if it is a good investment.
- List the three regular intervals that coupon bonds pay interest at.
- Determine the function that provides a more conservative bond evaluation compared to the DURATION function.
- Explain what the RECEIVED function shows.
Skill Level Intermediate
1. Analyzing Loans, Payments, and Interest
2. Calculating Depreciation
3. Determining Values and Rates of Return
4. Calculating Bond Coupon Dates and Security Durations
5. Calculating Security Prices and Yields
6. Analyzing Simulation Results
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